Simple postponement or project in danger? Questions are mounting around Intel’s mega-factory in Germany, which is to be built in Magdeburg, 130 km west of Berlin. The construction of the first two production units was to begin in the first half of 2023 before commissioning scheduled for 2027, but the American founder finally decided to delay the start of work, according to the local newspaper Volksstimme.
Initially, Intel had planned to devote an envelope of 17 billion euros for this plant to emerge from the ground as part of a broader investment plan in Europe of 80 billion euros over a decade. But soaring energy and raw material prices, geopolitical tensions and even the fall in demand on the semiconductor market have upset the calculations of the Santa Clara firm in recent months. From now on, Intel is no longer counting on a budget of 17 billion euros to build its German factory, but on construction costs which would be around 20 billion euros, according to information from Volksstimme. In addition, the company no longer gives dates for the launch of the site.
Intel wants more government subsidies
For now, Intel is not questioning this project, but the American company is waiting for a gesture from the German government to help it overcome the economic difficulties that have accumulated since the beginning of the year. Pat Gelsinger’s group must already recover 6.8 billion euros in public subsidies in Germany under the European Chips Act, a 42 billion euro plan to increase the EU’s share in the world’s production of semi -20% drivers by 2030, compared to less than 10% today. But that’s not enough for Intel, which told Volksstimme be in discussion with the German government to find a solution to fill a “deficit” of financing.
In addition to agreeing to a financial effort to maintain Intel’s colossal investments on its territory, Germany has also decided to allocate an envelope of 14 billion euros to attract other electronic chip giants, such as the group Taiwanese TSMC and South Korean Samsung. The stakes are high as the global semiconductor market is expected to double by 2030 and weigh 1000 billion dollars.